Embedded-Systems Software Makers See Opportunity in Intel's Wind River Buy

Companies hope to gain market share based on customer concerns

27 July 2009—You might expect the arrival of the world’s biggest chipmaker in a relatively small software market to have that market’s denizens shaking in their shoes. But instead, Intel’s acquisition of leading embedded-systems software maker Wind River this month has some competitors cheering.

“This is the single greatest thing that could have happened for our company,” says Tyler Nelson, vice president of marketing and business development for Wind River competitor QNX Software Systems, in Ottawa, Ont., Canada. “This was the big lottery ticket in the sky for our management team.”

Embedded systems—those billions of special-purpose computers controlling Internet routers, Mars rovers, and nearly everything else—represent a small but growing market. Embedded Market Forecasters, of Framingham, Mass., estimates the 2009 market for embedded-systems software, tools, and services at US $4 billion, and says the operating system component of that market is growing at 7 to 9 percent per year.

Intel has embarked on a big push into the embedded market. Earlier this year, it talked up plans to port Atom, its low-power x 86 microprocessor architecture, to foundry giant Taiwan Semiconductor Manufacturing Co., giving TSMC customers access to an embedded architecture to compete with offerings from ARM, MIPS Technologies, and IBM’s Power Architecture. Adding an embedded-software maker to the mix would make Intel a one-stop shop for embedded hardware and software, perhaps driving less-integrated rival firms out of business.

Intel’s Wind River purchase leaves “a major power vacuum,” says QNX’s Nelson. QNX—maker of the proprietary Neutrino operating system, which competes with Wind River’s VxWorks—sees great opportunity in Intel’s move. VxWorks operates on processors made by ARM, MIPS, and others. Though Intel has repeatedly stated that the bulk of Wind River’s work will remain on non-Intel architectures, customers are wary that Wind River will become an Intel-focused shop.

“It‘s clear from our discussions with Wind River’s customers—and our partners—that the whole marketplace is incredibly concerned...that Wind River’s assets will be focused on the x 86 Intel [chips],” says Nelson. This means, he says, that a competitor like QNX can make a strong pitch to a company that designs embedded systems with VxWorks on non-Intel chips to switch operating systems.

“A lot of Wind River’s customers and also Wind River’s chip partners are going to be reevaluating their operating-system choices,” echoes Charlie Ashton, business development vice president for embedded-systems software firm Timesys, based in Pittsburgh. “Anytime customers are reevaluating their operating-system choices, it’s an opportunity to go in and compete for that business.”

“In one fell swoop, [Intel] has signaled that this is going to be a massive market, and they’ve taken up the leading competitor,” Nelson says. “They’ve started an arms race across the rest of the industry.”

The good feelings are probably not in evidence at purveyors of embedded-processor architectures. But Intel’s impact on competitors has been overplayed by some analysts, according to consultant Guy Smith of Silicon Strategies Marketing, based in Alameda, Calif.

Intel represents a direct threat to its rivals’ market share, says Smith. But that doesn’t mean it plans to drive its competitors out of business.

“Intel understands the value of having a few weak competitors around,” Smith says, recalling antimonopolistic court actions in the United States and Europe that have dogged both Microsoft and, less prominently, Intel. “Intel definitely does not want to see ARM and MIPS and Power disappear. They just don’t want them to make a lot of money.”